Bitter debate over mining in small town Florence

FLORENCE - A coyote skitters through greasewood desert in the geographic heart of one of Pinal County's most historic towns, a tranquil scene that gives no hint of the fortune in copper hidden deep beneath the soil here -- or to the swirl of human turmoil the ore has caused above ground.

This barren patch of land is at the center of a political and economic battle over a proposed $700 million mining project and, by extension, the community's future.

This drama's chief adversaries are both corporate Goliaths. One wants to make money mining copper at the site, the other wants to cash in on development of surrounding lands. The townsfolk are seemingly caught in the crossfire.

These rivals offer two very different explanations of the proposed Florence Copper Project. Both involve forces intent on swaying a small Arizona town.

The object of this debate is a unique type of mine that would inject millions of gallons of sulfuric-acid solution deep into the ground to leach out the copper. It is a cost-effective method of mining, but the community is less certain about its safety.

Opponents say the mine is being pursued by greedy foreign speculators hoping to cash in on the copper lode, coming to a depressed, rural outpost with promises of an economic boom. Project owners, they say, hired sophisticated public-relations firms to influence opinion and assist pro-mine candidates in municipal elections. They used local leaders, powerful lobbyists and big-city lawyers to influence powerful politicians, including Gov. Jan Brewer. They promised clean mining with jobs and prosperity.

Proponents' narrative casts their rivals as wealthy Phoenix real-estate speculators and a Pinal County water tycoon who hope to sabotage plans for a copper mine that would bring prosperity to a poor community and millions of dollars to Arizona. Also motivated by money, proponents say, these saboteurs recruited potent Phoenix lobbyists, lawyers and PR specialists in a sophisticated propaganda campaign to control local politics. They spread fears of contaminated water, industrial blight, and long-term cleanup costs, all to scuttle the proposed mine and protect their development plans.

These are the two sides of the Florence furor, which has unfolded over the past two years, producing lawsuits, criminal investigations, a scuffle between political foes, nasty campaigns, dueling environmental and economic reports, backroom legislative deals and a noxious stream of rhetoric from both sides.

Nearly everyone claims to be a victim.

Michael McPhie, president and CEO of Curis Resources, which hopes to develop the mine, says he's been involved in contentious mining proposals around the world, yet never faced opposition matching the Florence experience.

"It's been relentless," he said. "Full of half-truths and innuendo. And it's been designed to instill fear in the local community."

Florence Mayor Tom Rankin, a mine opponent, counters that copper barons, after getting shot down by local voters and leaders, announced they would build the mine on state land without town approval.

The dispute is particularly mean-spirited because hired guns on both sides are mostly powerful Republican operatives who usually work together, but have turned on each other with personal vengeance and knowledge. They've called each other liars in an internecine campaign that could alter Arizona politics. Their contretemps involve the governor, the attorney general, state lawmakers and Arizona's land commissioner.

The five C's

Florence is a dusty desert town of about 25,000, historically sustained by the five C's of Arizona's economy: cattle, copper, cotton, citrus and climate. For years, however, the place has been known for a sixth C: convicts. At least nine prisons dominate the landscape, housing more than 11,000 inmates. Few would say it's an alluring place.

Yet as metro Phoenix's sprawl pushed southeast, Pinal County became one of the nation's fastest-growing regions. Over a decade, the population of Florence, the Pinal County seat, increased by a third, with homebuilders jockeying for real estate. Town leaders annexed land to expand their tax base while maintaining control over planning and zoning.

A parcel between the Gila River and Hunt Highway was among those taken in by new municipal boundaries. Its only noteworthy surface feature is a collapsed, 800-year-old Hohokam ruin. Its more recent history includes mining exploration that began four decades ago with the discovery of a rich copper lode more than 400 feet underground. Bore holes were dug to identify a deposit estimated at nearly three billion pounds.

Records show copper companies bought and sold the land several times, but never exploited it commercially. In the 1990s, two companies first toyed with the idea of "in-situ" mining, a process in which sulfuric acid is pumped via pipes more than 400 feet underground and floods the geology, leaching out copper ore. The stew of acid and minerals is then sucked back to the surface for processing.

Tests were conducted to determine whether the technology would work safely and effectively. For economic reasons, nobody ever followed through to full production, and safety questions are still debated.

Florence annexed the area and rezoned it in 2007 for mostly residential use. Speculators and homebuilders bought surrounding parcels.

The mining idea seemed dead and forgotten.

Enter the Canadians

But three years ago, Hunter Dickinson Inc., a Canadian company, became interested. Shareholders formed Curis Resources to own and operate the mining enterprise.

For about $25million, according to McPhie, Curis acquired 1,182 acres of private property and mineral rights to 160 acres of Arizona trust land.

State Land Commissioner Maria Baier said mining royalties on the parcel have the potential to generate more revenue than any other project in the nearly 100-year history of her agency: from $75million to $200million. By law, that money would go to the Arizona Pioneer Home for longtime elderly state residents, and to state correctional agencies.

Curis announced its Florence Copper Project with fanfare and promises of 170 jobs, a huge economic boost, tax revenues for the town and big mining royalties for the state. Property tours were open to the public, with McPhie comparing the 0.3 percent sulfuric acid solution that would be pumped underground to lemon juice. (Asked if he'd drink the fluid, McPhie said, "Sure, I'll take it. Absolutely.") Key Pinal County leaders were hired by the company. Scholarships were set up for local students.

Curis says production costs are expected to run about 68 cents per pound of copper. If the market price were to hold in the neighborhood of $3.35 a pound, that would mean profits of $2.70 on every pound of copper extracted, before royalties and taxes.

All the company needed was land-use approval from Florence and permits from environmental agencies. Public favor seemed to be with the mine.

But festivities faded. Residents began asking about potential pollution. Neighboring landholders reacted to the idea of an acid-pumping industry in their midst. And one of Pinal County's most imposing business figures, George Johnson, owner of a water company that serves 83,000 residents, decided the mine would be bad for business.

A rival moves in

Just months after Curis acquired its land, a real-estate investment group known as Southwest Value Partners, whose co-founder is Suns managing partner Robert Sarver, bought 4,508 adjacent acres.

Southwest Value representatives claim they were unaware of plans for an acid-based mine next door, a position disputed by Curis officials.

Both sides have commissioned studies by esteemed experts to support their promises or refute opposing claims.

Half the debate has to do with potential environmental and aesthetic impacts of an in-situ project that would pump up to 11,000 gallons per minute of solution beneath the local aquifer -- to depths ranging from 400 to nearly 1,200 feet -- then vacuum out the liquid along with leached minerals. Over the mine's 22-year lifetime, up to 15 billion pounds of sulfuric acid might be used.

Curis says it plans to spend $280 million developing a clean industry with virtually no blight on the land, and with safety measures in place to ensure that acid, arsenic, radionuclides and other pollutants do not contaminate the aquifer. Once copper is extracted, the company says, the site will be suitable for residential development.

Yet Southwest Value, Johnson and town leaders fear the mine would wreck Florence's growth plans and pollute its groundwater. They warn that bore holes may leak, protective measures are insufficient, cleanup guarantees are inadequate, and that in-situ mines in the U.S. have never successfully restored groundwater purity after closure.

The debate also involves the projected economic benefits of mining versus development.

Based on a study it commissioned from Arizona State University, Curis puts the total economic impact at $2.2 billion, creating 681 direct and indirect jobs over 28 years. Tax revenues and royalties are estimated at $325 million. Quoting other experts, Curis says housing development in the area will be negligible for a decade.

Studies commissioned by Southwest Value and its surrogates, by contrast, deride those forecasts. They predict that a mine would produce work for only 440 people, with a $91 million direct financial impact that mostly benefits Maricopa County, not Florence. As the real-estate market rebounds, they say, new homes and commercial projects would produce more money than the proposed mining operation.

The arguments, although ponderously technical, are filled with passion.

Curis, for example, published an August 2011 letter attacking "False Claims and Deceptive Tactics" made by Southwest Value. Days later, Justin Merritt, the development company's senior investment professional, issued a point-by-point rebuttal of 18 pages with a sweeping conclusion: "There is not one single allegation presented by Curis that holds true."

Rebecca Rios, former legislator and daughter of Pinal County Supervisor Pete Rios, became Curis' community- and government-affairs adviser. Rita Maguire, former director of the Arizona Department of Water Resources, was hired to combat pollution claims.

Curis also hired then-Pinal County Supervisor Bryan Martyn as a consultant. Within months, he became director of the Pinal Truth Squad, an organization partly financed by Curis to attack mining foes. Its website had been particularly critical of Rankin, a project opponent who won the town's mayoral election this spring.

Martyn left the Truth Squad to become state parks director May 1. Baier, the state land commissioner who supports the mine, helped hire Martyn in her capacity as the parks board vice chairwoman. The Truth Squad is represented by Husk Partners Inc., headed by lobbyist and former state and federal prosecutor Gary Husk.

The Truth Squad also employs ex-journalist David Leibowitz to conduct its pro-Curis public-relations campaign. Leibowitz was a radio talk-show host and columnist at The Arizona Republic before doing PR for political notables like Republican U.S. Senate candidate Wil Cardon and former Democratic Phoenix Mayor Phil Gordon.

Nearly all of those on the Curis team are part of Coughlin's political circle: Maguire and Baier were his colleagues on the staff of then-Gov. Fife Symington. Husk lobbied with him for the Fiesta Bowl.

Anti-mine forces

On the other side are nine prominent development companies -- including Pulte Homes, Sunbelt Holdings and Killian Investments -- that own property near the proposed mine. Southwest Value Partners leads the opposition.

The company is represented by the Rose Law Group, headed by Jordan Rose, a development attorney and a prominent Republican lawyer. Her Scottsdale office is filled with pictures of GOP heavyweights and her husband, Jason Rose, a high-profile consultant.

Southwest Value also hired FirstStrategic Communications & Public Affairs. It is led by Wes Gullett, last year's unsuccessful Phoenix mayoral candidate and a former aide to Sen. John McCain.Gullett also is a Symington alumnus, and was Coughlin's one-time partner at HighGround. One of his FirstStrategic partners is Bettina Nava, another McCain/Symington alum who is Husk's cousin.

Rounding out the anti-mine side is Johnson, owner of Johnson Utilities LLC, the largest water company in Pinal County. A real-estate developer in his own right, Johnson has his own history of environmental violations. In one case, he was hit with the highest drinking-water fine in state history. He also paid a record $12 million settlement for bulldozing thousands of acres of desert plants and Hohokam ruins without permits.

Johnson's company has waged war on Curis using its newsletter, as has Protect Our Water Our Future, an organization founded and funded by Southwest Value Partners.

Caught in the middle

The clash of business interests and erstwhile Republican comrades quickly turned personal, spilling into the open.

While addressing the Florence Planning Commission, Rose claimed that Curis exaggerated the mine's potential to generate government revenues. She asserted that the mine will reuse sulfuric acid, qualifying it for recycling credits covering 75 percent of its tax bill.

Within minutes, Coughlin's company sent out a Twitter message declaring, "Jordan Rose just knowing(ly) lied to the Florence P&Z." Rose sent Coughlin a letter threatening to sue for defamation, which she says prompted him to retract the tweet.

Curis then sent its own letter to Rose demanding a retraction for statements she made to the Planning Commission. Rose, through lawyers, said her assertions were justified and privileged by law.

Meanwhile, back in Florence, the copper mess blew into what the mayor said is the most divisive controversy to hit town in his lifetime.

In letters on file at Town Hall, for example, resident Elizabeth A. Beatty said Florence "has been given an incredible gift and opportunity with the Florence Copper Project, and it would be a waste to throw it away." Yet resident Karen Shoppell sent an e-mail to the mayor saying, "We did not fall for all the free meals and entertainment Curis has done to win people over."

Vicki D'Elia summed it up in another message to city leaders: "What pains me more than anything else is how this issue has driven a wedge between all of the citizens of this town."

The votes are in

Against that backdrop, Curis in October 2011 made a last-minute effort to withdraw its application after city staff and the Planning Commission publicly opposed the mine. That would have prevented the mine from being voted down outright, giving the company more time to muster support and bring the matter back to the council later.

The Town Council, under pressure for months, rejected that request and voted not to allow the project.

The battle seemed over -- but it was just getting started. Municipal elections were months away, and a new council might produce different results. Both sides moved into campaign mode.

The Truth Squad's website assailed Rankin as a lackey of Johnson, who was painted as a bully millionaire from Paradise Valley. The two men filed a complaint with the state Attorney General's Office, alleging campaign-law violations. The Truth Squad responded with a similar complaint against Johnson.

Leibowitz circulated a news release illustrative of the vitriol: "George Johnson's disregard for the law shouldn't surprise anyone. It's part of a pattern of behavior stretching decades. Apparently, it wasn't enough for Johnson, his family, his lobbyist and his wealthy pals to contribute thousands of dollars to campaigns. Johnson had to go outside the law and use his company's mailers to illegally endorse candidates."

To date, nothing has come of either campaign complaint.

Meanwhile, while attending a spring festival in Florence, Martyn, then working for Truth Squad, wound up in a physical altercation with Christopher "Shon" White, an online radio-station owner. A misdemeanor charge of disorderly conduct is pending against Martyn. White, who filed a lawsuit over the incident, says the dispute involved Martyn's role at the Truth Squad.

Thumbing the nose

Days after the Town Council voted not to allow the Florence Copper Project on Curis' land, the company announced plans to proceed on an island of state trust land not subject to Florence's jurisdiction. McPhie says a town survey conducted early on showed most residents supported the mine.

But Rankin says public sentiment was clearly expressed in the March Town Council election in which he and other anti-mine candidates defeated a slate backed by Curis.

"The election of all anti-mine candidates is the most accurate poll you could possibly do," agreed Jordan Rose.

McPhie still hopes for municipal approval, but intends to begin Phase 1 of the mine this month. All he needs are federal and state regulatory permits.